Junior miner Atlas Iron has given takeover suitor Mineral Resources three days to better a cash offer by billionaire mining magnate Gina Rinehart.
Redstone Corporation, a wholly‐owned subsidiary of Rinehart’s Hancock Prospecting, yesterday made an all cash $390 million offer for 100% of Atlas Iron.
This is a premium of around 41% to the Mineral Resources offer, an all-scrip bid made in April.
Atlas shares are trading at 4.4 cents today. The Mineral Resources offer was at 3.02 cents a share and Rinehart’s at 4.2 cents.
Today the Atlas Board says the Hancock offer is superior to the Mineral Resources scheme.
Atlas has issued a notice giving Mineral Resources three business days to make a counter proposal.
Both Rinehart and Andrew Twiggy Forrest’s Fortescue Metals have a 19.9% holding in Atlas, either of which could block the play by Mineral Resources.
The three suitors see upside in consolidating the Atlas iron ore assets, which have high iron content ore, in the Pilbara into their own.
“We see long term synergies between the Atlas assets and the other iron ore interests within the Hancock Group,” says Hancock executive director Tad Watroba.
“There is potential to unlock value through the future development of Atlas resources as part of our wider system of operations.”
Atlas Iron was an early victim of falling iron ore prices. In April 2015, it announced it was mothballing its mines because it was costing more to dig up the ore than buyers were willing to pay.
The crash in iron ore prices was then driven by softening Chinese demand. Since then the company has restructured, global prices have surged and the miner is cash flow positive.
In the latest half year results, Atlas posted a statutory net loss after tax of $21 million. Sales were $308 million, down from $498 million.